Sunday, February 20, 2011

Wanna get away?


With the cold and rainy weekend we just had, it’s hard to believe that the Spring and Summer months are just around the corner. And along with that come planning vacations and road trips alike. Vacations are what we work so hard for during the year. Here are some tips & suggestions that will help prevent the current economic climate from putting a damper on the beautiful weather ahead.

1. Ask the pros- with all the hand held devices out there equipped with WIFI and too many G’s to keep track of you can literally be researching your next vacation while sitting at a drive thru at a fast food restaurant. But the DIY (do-it-yourself) approach isn’t always the most prudent way to go. Sometimes planning your vacation through a certified travel agent can present options that you never knew existed. Especially when traveling abroad. Using a travel agent can be the best way to customize your overall experience, while cutting through all the red tape and providing some invaluable advice and guidance along the way. It can save time and add value for an often, surprisingly reasonable fee. Check with your credit card company, some may provide a similar service that is built into the annual fees of the card.

2. The all inclusive deal- when it comes to traveling the “less is more” philosophy is usually reserved for soul searchers trying to find themselves by back-packing through Europe while, throwing both caution and personal hygiene to the wind. For those of us who left those days behind after we graduated college the “Package Deal” is often a cost saving and convenient way to travel. Bundling all of your major expenses such as flight, lodging, rental car and even food and activities often costs less than paying for each item individually. Top travel sites like Orbitz and Expedia often let you tailor your vacation right down to your scuba gear and massage treatments. This method will give you a grand total to work with and will help minimize any surprises.

3. There's no place like home- sure everyone wants to stay at a 4 star hotel, but staying at one for an extended period of time can leave you with a 4 figure bill as well. Paying considerably less for a house or apartment with kitchen amenities can not only save you money on lodging, but will save you money on food as well. Preparing your own breakfast or lunch and treating yourself to a nice dinner out can be a lot more forgiving on the wallet than ordering room service or dining out for all 3 squares. Home exchanges have become more and more popular with sites like craigslist and homeexchange.com

4. Hit the road- some of us don’t have to travel very far to escape the daily grind. Even with gas prices at an all time high for the month of February taking a road trip could be just what the doctor ordered. Take the scenic route where you can. Road trips are designed to have a little bit of the vacation built into the journey itself. Bring plenty of snacks and even more good music. My plan for my next “mini” vacation is to take a day trip to Santa Barbara. A seed that was planted when one of my best friends was generous enough to offer me his very nice Porsche for the day. Stay tuned…

5. Get insured- an added expense (roughly 5% of the total cost) that is well worth the piece of mind that it provides. A few years ago, my mother had planned an epic 3 week trip through Europe and had fallen ill just one week prior to her departure. Had she not opted for the insurance she would’ve been out almost ten thousand bucks. There are three categories of coverage when it comes to insuring your trip: 1) Trip cancellation/interruption 2) personal belongings coverage 3) Health insurance (in the event that your current medical coverage does not cover you abroad. Again, check with your credit card company to see if any of these insurance options are built into the benefits of the card.

**A special thanks to Jordan Rane-Travel writer at large and an all around good guy**

Sunday, February 13, 2011

The dot com re-boom?


Having seen "The Social Network" for the second time on DVD this weekend got me thinking. With all the attention and news surrounding start up internet companies like Facebook, Twitter, Groupon and most recently The Huffington Post, with their insane buyouts and even more insane valuations reaching well into the billions. Are we re-inflating a bubble that burst almost ten years ago? A burst that was as far reaching as the eruption of the Icelandic volcano with a name that no one could pronounce.

Michael Hiltzik of The L.A. Times poses the question: Are we having a relapse of tech sector insanity?

The last time valuations soared so high for companies with modest track records, or no track records, the trend line heralded the dot-com crash.
By Michael Hiltzik

I am now officially terrified.

Groupon, a coupon-hawking website out of Chicago with less than two years of history to offer, is heading toward an initial public offering that may value it as high as $15 billion.

Facebook, the popular social networking and privacy-wrecking website, is valued at somewhere between $50 billion and $80 billion by private-market reckonings.

So it looks like Arianna Huffington sold herself cheap — she got only $315 million from AOL for her Huffington Post. (Or is it she who acquired AOL?)
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What's scary about all this, you ask? Simply that the last time valuations soared so high for companies with modest track records, or no track records, the trend line didn't herald a "new world" or a "new paradigm" or whatever they're calling it today. It heralded a crash.

Sorry to reopen old wounds, but after years of increasingly insane valuations the tech-heavy Nasdaq composite index topped out at just over 5,000 on March 10, 2000. It never saw that handle again. Today it's still shy of 2,800.

It's not just the numbers that transport one to bygone times; it's the familiar trappings of frenzy. There are the same explanations that what's important isn't actual revenues, but eyeballs, and the lionization of venture investors who thus far have proved themselves wholly capable of shoveling the money out, not yet of shoveling it back in.

Today's golden boy is Yuri Milner, whose Moscow-based Digital Sky Technologies has taken big stakes in Facebook and Groupon, among other firms. A recent article in the San Jose Mercury News contended that Milner has "rewritten many of the rules of start-up investing," although it sounded to me as though he's just a very aggressive venture guy, not unlike the types who used to get written up in the exact same style in the late 1990s.

In fact, Milner has partnered with Ron Conway, a lion of the dot-com era, to invest in start-ups nurtured by something called Y Combinator, which claims to have developed "a new model of startup funding" but on the surface looks very much like what we used to call an "incubator."

The model incubator was Idealab, the Pasadena outfit founded by the entrepreneur Bill Gross in 1996. Idealab is still around, although for some reason its website still brags about founding EToys, which went public in 1999 and bankrupt in 2001. (Like FAO Schwarz and KB Toys, it's now just an appendage of Toys R Us.)

Even today's young entrepreneurs seem like retreads of the start-up founders who used to troop through our offices at The Times showing off their supposedly novel iterations of search engine sites — except that today they're working novel changes on social media sites. They have the same studied scruffiness, the same social maladroitness that contrasts so charmingly with the decor of the four-star restaurants where they're being interviewed for glossy magazines, the same twerpish approach to old-world marketing. (Groupon is still apologizing for its tone-deaf Super Bowl ads.)

All that aside, the numbers are still what count. And by any standard except those of the dot-com boom the valuations being tossed around for social networking sites and other investing flavors of the year look ridiculous.

Facebook's purported valuation on the private marketplace site SharesPost, where insiders can supposedly shop their tied-up shares in not-yet-public companies, reached about $80 billion at the end of January. That made it potentially the nation's second-most-valuable Internet company, behind Google, which has a market cap of about $190 billion.

Facebook recorded revenue of about $1.2 billion in the first nine months of 2010, Goldman Sachs recently told prospective investors. Google's revenue for the same period was $21 billion.

Then there's Groupon, which has been aptly described as an online version of those fat coupon books offering discounts at local shops that are still flogged door-to-door as school and church fundraisers. In what will go down either as the peak of early 21st century hubris or a heck of a canny move, the company turned down a purported $6-billion acquisition offer from Google, opting for an IPO instead.

Is Groupon a good candidate to own the future? No one knows how long the group-coupon craze will last. Thus far, it's been driven by a few eye-popping offers — Groupon made its name with a half-off coupon for Gap back in August, but it was outpaced by a half-off Amazon.com coupon offered by a new rival, LivingSocial, last month. These promotions aren't cheap; either Amazon or LivingSocial took a loss of about $14 million on those coupons, which offered $20 in merchandise for $10.

On the other hand, Amazon owns a $175-million stake in LivingSocial, so maybe it's a wash. If Amazon chalks that loss up to advertising, it comes to all of 1.4% of its annual $1 billion in marketing expenses.

That deal also tells you that Groupon faces lots of competition. It seems every day brings a new social-couponing pitch to my e-mail box; even Facebook is reportedly getting into the act.

What really makes these 2010 deals sound like the second coming of 1999 is that nobody really knows how these companies are performing, because their financial results haven't been subjected to public scrutiny. In the absence of firm numbers, the basis of the frenzy over social media companies is their "story." This one's the "brand leader," that one's got critical mass, a third is moving smartly into Europe.

I've heard it all before. In 1999, Morgan Stanley dot-com analyst Mary Meeker, then dubbed the "queen of the Net," was talking up Yahoo because "it's international … a brand leader on a global basis." This sort of cheerleading had driven Yahoo to a price-to-earnings ratio in the stratospheric 900s by mid-1999. Yahoo's P/E today is about 18.

The frightening thing now is that people are talking about the outsized value of Facebook and other tech upstarts as if their valuations were perfectly normal. That's what we heard about Yahoo and other dot-coms — just before the Nasdaq crashed and made fools of everybody. From the Nasdaq peak to the end of 2000 Yahoo lost almost 85% of its value.

Today's holy grail, of course, is the next Google. The Internet search giant went public in 2004 at $85 a share and hit $700 about three years later. But that's its peak; it's currently in the low $600s.

Anyway, you can go broke fast chasing the next Google — it's like the first hit the smack dealer offers for free, or the blackjack you draw the first time you ever play 21. It's an outlier, and for most investors the prelude to tears, or insanity. Maybe one of these hot companies is the next Google. But it's more likely that these prices are insane.

Michael Hiltzik's column appears Sundays and Wednesdays. Reach him at mhiltzik@latimes.com, read past columns at latimes.com/hiltzik, check out facebook.com/hiltzik and follow @latimeshiltzik on Twitter.

Sunday, February 6, 2011

Giving credit where credit is due


Most of us have either directly or indirectly experienced the effects of the credit crunch that started in late 2008 which is now just starting to loosen up. Banks stopped lending money and credit card companies were looking for any excuse to either drastically reduce your credit limit or in some cases close your account all together with very little notice and without reason.

These stories were all over the news, people with perfect credit scores who have never missed a single payment were being treated like second tier citizens by their once beloved credit card companies. I often dismissed such stories as situations that happened to “those people”, something like that could never happen to me, I was an obvious exception to a rule that applied to everyone else. At least that’s what I thought, until I received a letter from American Express stating that my Gold Card that had no pre-set spending limit was being reduced to $2500 due to my most recent credit report. Which essentially translated to we reduced your credit limit with us because we can.

This had to be a mistake, I thought to myself. I had my Gold Card for almost 15 years and not once was I ever late in making a payment. I called the American Express customer service line that I actually had in my contacts on my cell phone. Once the representative got on the line I was livid. I have always considered myself to be a great negotiator over the phone, but no matter what I said there was no reversing the decision that had been made. By the time I pressed the “end” button on my BlackBerry my 15-year relationship with my autumnal colored piece of plastic also came to an end. I exchanged my 98,000 points that I accumulated over the years for a measly $400 in travelers checks and decided to part ways with an object that I often identified myself with. I was once proud to have a Gold Card, with its concierge service and elite status. I liked the way it looked in my wallet and I liked its exclusivity even more. But once I realized how foolish I was to give this “thing” such reverence, losing my Gold Card made me find perspective. I stopped living my life in accordance to how a Gold Card Member should and began acting, well...more like me.

Then just this last Wednesday something funny happened. After almost 2 years I received another letter from American Express that read: “We would like to apologize for the misunderstanding that occurred with your account, we have reactivated your status with us. Please give us a call for further details.” A part of me wanted to tear the letter in half and burn in it in effigy but the thought of hearing a mea culpa was too enticing to ignore. So, once again, 2 years after our break-up I was giving American Express a call, but this time I would be the one being negotiated to. They offered me a Platinum Card with 2 years of no annual fees, a savings of almost a thousand dollars. I countered, “Platinum is a little to flashy for me I said, how about we keep it simple and go green instead.” The same offer of waiving the first 2 years of annual fees applied, this time it would be a savings of only 80 dollars. This was not enough for me to forget about the past, so I asked for more. When I hit the “end button” on my phone this time I had a my Amex back in a different color with 2 years of no annual fees plus 25,000 points which is good for a round trip ticket anywhere in the lower 48. I plan on using those free points along with anymore I accumulate to take a much needed vacation. But before the 2 years are up I will make it a point to re-evaluate my relationship with Amex and decide if I want to stay or take my business elsewhere. Why? For the same reason they gave me, because I can.
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